As I was reading this week in the text, the part the caught my attention was the markup pricing section. This section explained in detail the process by which price markups are established. The formula goes as follows: Retail price = Cost over 1 - Desired return on sales. So, if the cost is $5.00 and the desired return on sales is 45% then the retail price must be $9.10. The text continues by stating that this simple function is the most commonly used method to establish product markup among retailers and wholesalers.
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